Fifth Third Bank will be front and center Wednesday when the U.S. Supreme Court hears a case that could decide when employees can sue their companies over retirement plan losses.

The case began in the depths of the Great Recession, when Fifth Third stock plummeted and employees who held that stock in their 401(k) plans lost big. Some of those employees sued to recover their losses, arguing the company should have known its stock was a risky investment option.

That may sound like a relatively clear-cut issue for a court to decide, but the case has the potential to impact hundreds of company-backed retirement plans.

Fifth Third and other companies have said allowing such lawsuits would discourage employers from offering company stock as a match to employee contributions to their 401(k)s.

They say putting companies in such a position would leave retirement plan administrators “on a razor’s edge,” subject to lawsuits simply for doing their jobs.

The employees, however, say companies have a duty to protect the interests of workers who entrust them with their retirement savings.

The problem, they say, is that companies like Fifth Third may have a conflict of interest because they want more employees to hold company stock.

“The conflicting incentives ... impelled them to take disloyal and imprudent actions that caused devastating losses for participants in the plan,” the employees said in their legal arguments filed with the Supreme Court.

Fifth Third, the region’s largest bank, counters that employees weren’t idle bystanders as company stock plunged 75 percent between 2007 and 2009, from about $40 a share to $10. While the company match comes in the form of Fifth Third stock, employees are free to transfer that stock into any of 20 other investment funds.

Fifth Third stock has since recovered some of those losses and now trades at about $23 a share.

The Supreme Court will not decide the merits of the employees’ lawsuit, but rather the standard by which the case can go forward.

If the court rules for Fifth Third, employees likely would have to prove “extraordinary circumstances” before they could seek damages for retirement plan losses. If it rules for the employees, the standard would be lower and employees could more easily seek to recover damages.

Fifth Third officials declined to comment on the case. The company’s employee profit-sharing plan, which includes the 401(k), has $1.3 billion in assets, 26,000 participants and an average balance per employee of $58,000 as of last year, according to BrightScope data. ⬛